'Terrible' to tell people to move city to find work: BoE chief economist

LONDON (Reuters) - British people should not be expected to move city to find work, and instead the government should find a way to revive depressed towns that have lost their original economic purpose, Bank of England chief economist Andy Haldane said on Friday.

Haldane, in an interview with the Financial Times, said finding a way to reinvigorate depressed towns was probably the biggest economic challenge facing Britain.

Regional economic policy is not the BoE’s job - which is to ensure financial stability and control inflation across the United Kingdom as a whole - but Haldane said understanding less prosperous corners of Britain was important for building a picture of the economy as a whole.

“I’ve not found a better way of tapping into a bit of a window on people’s souls than turning up and listening to what they have to say,” he said.

Asked if people who lived in poorer areas should move to a different city for work, Haldane said this was unreasonable.

“It’s a terrible thing to say and reflects a complete misunderstanding of how most people are made up. They like roots,” he said. “Most people don’t want to leave.”

“ON YOUR BIKE”

Haldane praised the recent electrification of a railway line between the fairly buoyant northern city of Manchester and Blackpool, a rainswept seaside resort that has suffered since Britons have been able to afford to travel to sunnier places.

British policymakers have not always appeared sympathetic toward people in poorer regions.

The Conservative Party divided public opinion in the early 1980s, a time of high unemployment, when its chairman Norman Tebbit said those without jobs should follow the example of his father, who in the 1930s “got on his bike and looked for work”.

A former BoE Governor, Eddie George, said in 1998 that job losses in northern England were an undesirable but acceptable price to pay to curb inflation in the south.

Britain suffers one of the highest degrees of regional inequality of any European country, and some of the strongest support for leaving the European Union in the June 2016 referendum was found in poorer areas outside major cities.

Haldane said the Brexit vote had moved the issue up the agenda, and that solving it should be a priority.

“In some ways for me, that probably is the largest of the economic issues facing ‘UK plc’ right now.”

Unemployment in Britain recently touched its lowest since 1975, at 4.4 percent, but wages have stagnated in real terms for the past decade since the global financial crisis.